Can refund of IGST be granted when mistakenly drawback is claimed under column “A” of drawback schedule?

Can refund of IGST be granted when mistakenly drawback is claimed under column “A” of drawback schedule?

The High Court of Delhi, bench of Justices?Rajiv Shakdher and Tara Vitasta Ganju, held that The respondents/revenue are directed to refund the IGST amounting to Rs.7,12,996/- along with interest at the rate of 6% (simple) commencing from 01.10.2021. The interest will run till the time payment is made to the petitioner.

FACTS OF THE CASE

The petitioner has, admittedly, exported goods valued at Rs.39,61,094/- At the relevant time, the petitioner exercised the option available?under Section 16(3)(b) of the Integrated Goods and Service Tax Act, 2017 [in short ?IGST Act?] which allowed the petitioner to pay IGST, and, thereafter, claim the refund. Admittedly, the petitioner has paid Rs.7, 12,996/- towards IGST.

The petitioner, mistakenly in the shipping bills filed qua the subject goods, mentioned the wrong sub-serial number i.e., 8455A, instead of 8455B. Furthermore, since the petitioner appended suffix “A” to serial number 8455 the following declarations got triggered:

1. “DBK001- I declare that no input tax credit of the Central Goods and Services Tax or of the Integrated Goods and Services Tax has been availed for any of the inputs or input services used in the manufacture of the export goods.
2. DBK002- I declare that no refund of Integrated Goods and Services Tax paid on export goods shall be claimed.
3. DBK003- I declare that CENVAT credit on the inputs or input services used in the manufacture of the export goods has not been carried forward in terms of the Central Goods and Services Tax Act, 2017.”

According to the Petitioner the refund of IGST was not made available as the respondents erroneously concluded that the rate of duty drawback qua the subject goods exported by the petitioner under column A was higher. What is not in dispute, and as noticed above, is that the petitioner did trigger the declaration that it would not be claiming IGST refund when it indicated that its product would fall under Column ?A? and claims that the petitioner was not required to file a separate application for seeking refund of IGST. The Petitioner further claims that the provisions of Section 54 of the Central Goods and Services Act, 2017 read with Section 16 of the IGST Act, would clearly establish that the shipping bill would work as a refund application.

The Petitioner further states that the provisions of Section 56 of the CGST Act to contend that if refund was not approved within the stipulated period i.e., 60 days, then the petitioner would be entitled to statutory interest at the rate of 6% commencing from the date of receipt of application up until the date of payment of the refund.

• On the other hand, Respondent contends that the respondents were well within their rights not to grant refund, as no application was preferred for correcting the error, which the petitioner had, admittedly, committed. once an application is made, only then correction would be made in the system, which could, thereafter, perhaps lead to the petitioner obtaining relief as claimed i.e., refund of IGST.

COURT HELD

The Court held that the issue is covered by various judgments passed by this Court as well as by the other High Courts. They held that according to various judgements a separate application for refund was not required to be filed. The shipping bills would operate as a refund application. With respect to the interest claimed by the petitioner the judge took reference of the case the Phoenix Contact India Pvt. Ltd. v. Commissioner of Customs (Exports), 2022 SCC OnLine Del 1368. In that case, as noticed in paragraph 20 of the judgement that an application for correction was made, which was given effect to by the revenue by a particular date, despite which, refund was not paid. It is in these circumstances that the Court had directed the payment of refund from the date, when the correction was effected by the revenue.

It is quite evident that once the petitioner had taken steps to move the Court and notice was issued in the writ petition, the respondents were, in a sense, forewarned that statutory interest would kick-in. The notice in this petition was issued on 01.10.2021, in the given facts, in the very least, interest should accrue to the petitioner at the statutory rate i.e., 6% (simple) from 01.10.2021. The respondents/revenue are directed to refund the IGST amounting to Rs.7,12,996/- along with interest at the rate of 6% (simple) commencing from 01.10.2021. The interest will run till the time payment is made to the petitioner.

ANALYSIS OF THE JUDGEMENT

By noticing the above order, we analyse that the shipping bills would operate as a refund application as envisaged under Section 54 of the CGST Act read with Section 16 of the IGST Act as well as Rule 96(1) of the CGST Rules. Further, the registered person under GST shall ensure that all the compliances under GST are done with proper care so that it doesn’t lose the benefits under GST.

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